Sunoco 'Surviving the Merger'

DALLAS & PHILADELPHIA -- With the disposition of a network of approximately 4,900 gas stations in 23 states still a question mark, Energy Transfer Partners LP and Sunoco Inc. have announced the successful completion of the previously announced merger of a wholly owned subsidiary of ETP with and into Sunoco, with Sunoco "surviving" the merger as a subsidiary of ETP.

Effective with the opening of the market on Friday, Sunoco ceased to be a publicly traded company and its common stock discontinued trading on the NYSE.

Nearly 85% of respondents to a CSP Daily News poll asking, "Now that Sunoco shareholders have 'overwhelmingly' approved the merger with Energy Transfer Partners, will ETP sell Sunoco's retail network?" said "yes" (about 60% saying that they believe a sale will happen "relatively soon" and about 25% saying that they believe a sale will occur, "but not right away); the rest said "no."

Under the terms of the deal, Sunoco shareholders were able to receive, for each Sunoco common share they owned, a combination of $25 in cash and 0.5245 of an ETP common unit (the standard mix of consideration). In lieu of receiving this standard mix of consideration, Sunoco shareholders, for each Sunoco common share they owned, could make an election to receive $50.00 in cash (the cash consideration) or 1.0490 ETP common units (the unit consideration), with such cash consideration and unit consideration subject to proration in accordance with the merger agreement. Because the cash consideration was oversubscribed, all holders making a cash election will have their cash consideration prorated and a portion of it will be substituted with ETP common units in accordance with the terms of the merger agreement.

Based on the final results of the merger consideration elections:

Holders of approximately 2.59% of outstanding Sunoco shares, or approximately 2,711,665 shares, elected to and will receive the standard mix of consideration.

Holders of approximately 72.37% of outstanding Sunoco shares, or approximately 75,844,918 shares, elected the cash consideration and will receive $26.47 in cash and 0.493730 of an ETP common unit.

Holders of approximately 4.24% of outstanding Sunoco shares, or approximately 4,449,502 shares, elected to and will receive the unit consideration.

Holders of approximately 20.80% of outstanding Sunoco shares, or approximately 21,801,776 shares, made no election and will receive the standard mix of consideration.

In the aggregate, Sunoco shareholders will receive 50% of the merger consideration in cash and 50% in ETP common units. The total consideration to be paid in cash will be approximately $2.6 billion and the total consideration to be paid in equity will be approximately 54,971,724 ETP common units.

With the closing of the merger, Sunoco contributed to ETP $2 billion in cash and the equity interests of Sunoco Partners LLC (which currently holds the 2% general partner interest, incentive distribution rights and a 32.4% limited partner interest in Sunoco Logistics Partners LP (SXL), in exchange for 90,706,000 newly issued Class F units of ETP.

Also, Energy Transfer Equity LP (ETE) contributed its interest in Southern Union Co. to ETP Holdco Corp. in exchange for a 60% equity interest in ETP Holdco. In conjunction with ETE's contribution, ETP contributed its interest in Sunoco (exclusive of its interest in SXL) to ETP Holdco and retained a 40% equity interest in ETP Holdco.

As a result of the merger and the above transactions, ETP and ETE own an indirect 40% and 60% equity interest, respectively, in both Sunoco and Southern Union, while ETP owns the general partner interests, incentive distribution rights and a 32.4% limited partner interest in SXL.

In connection with the merger and the above transactions, ETP has agreed to become a co-obligor on approximately $965 million of aggregate principal amount of Sunoco's existing senior notes and debentures.

Dallas-based ETP is a publicly traded partnership owning and operating a diversified portfolio of energy assets. ETP has pipeline operations in Alabama, Arizona, Arkansas, Colorado, Florida, Louisiana, Mississippi, New Mexico, Utah and West Virginia and owns the largest intrastate pipeline system in Texas.

Energy Transfer Equity is a publicly traded partnership that owns the general partner and 100% of the incentive distribution rights (IDRs) of ETP and approximately 52.5 million ETP limited partner units; and owns the general partner and 100% of the IDRs of Regency Energy Partners LP and approximately 26.3 million Regency limited partner units.

Sunoco, Philadelphia, is a leading logistics and retail company with a network of approximately 4,900 retail locations in 23 states.

Sunoco Logistics Partners is a master limited partnership that owns and operates a logistics business consisting of a geographically diverse portfolio of complementary pipeline, terminalling and crude oil acquisition and marketing assets.